Masimba Construction says it expects earnings this year to be “significantly” higher than last year on increased infrastructure business and stable costs.
The company says it has a strong order book for work in infrastructure this year, and has acquired new equipment to meet growing demand. The company is benefitting from increased infrastructure spending, including from the government and mines.
“The volume of works, encompassing roads, mining and housing infrastructure, increased significantly in the quarter under review. A number of works, including the Skyline to Chimanimani road, were completed in the period while the rest are progressing well and are on program,” Masimba says in its latest trade update.
Profits this year will be better than last year, the company projects.
“The order book has remained firm in the nine months period resulting in improved volume and resource utilisation efficiencies. Accordingly, the results for the year ending 31 December 2020 are expected to be significantly ahead of the comparative period,” Masimba said.
Masimba is one of five local companies contracted to rebuild part of the Beitbridge highways. The company is also rebuilding roads destroyed by Cyclone Idai in Chimanimani.
Business remained profitable in the three months to September, mostly because of productivity and procurement efficiencies. Prices, the company says, have also been stable.
“The trading environment in the last quarter ended 30 September 2020 was largely stable supported by the Foreign Currency Exchange auction system and a contractionary fiscal policy. This, resultantly, contributed to the progressive reduction of month-on-month inflation and stability of prices of construction materials and services.
Masimba: capex spending up
Masimba says “significant amounts were expended in capital equipment to support the growing order book”. The capital expenditure was funded by internal resources and external borrowings.
Masimba’s update ties in with the latest reports from other construction firms, such as Turnall and PPC, which have reported some recovery over the last quarter after a year hit by COVID-19 restrictions and the economic crisis.
Sales volumes at Turnall were 11% higher in the three months to September than over the same quarter of 2019, and 81% above the previous COVID-hit quarter.
Cement maker PPC, in its own report, said sales volumes between July and September were up by between 35% and 40%. It was a recovery from the full year to March, which saw a 15% drop. PPC says it “secured supply contracts for a substantial proportion of the large infrastructure projects in Zimbabwe”.
Lafarge said sales volumes in July were the highest recorded in the month since 2003, as business recovered after the COVID-19 period. Third-quarter demand for cement was 34% higher than Q2.